What groups of employees should an employer pay attention to when considering restructuring in Vietnam?

Notable labor groups when considering restructuring

When an enterprise conducts restructuring, it will affect the rights of employees who are working for the enterprise. Therefore, the enterprise must solve labor problems before restructuring. Accordingly, there are certain groups of employees that the enterprise needs to pay attention to when considering restructuring.

In this article, BLawyers Vietnam provides information about these groups of employees when considering restructuring as follows:

1. The group of employees temporarily working or whose labor contract is nearly expired

For this group of employees, enterprises need to notice the term of their labor contract compared to the duration of restructuring. This will help the enterprise to develop an appropriate labor utilization plan.

For employees doing temporary work, the enterprise may make an agreement with such employee or the representative organization of the employee to terminate work, pay wages, or continue to rotate them through the new work. For employees who are nearing the expiration of their labor contracts, enterprises must also renegotiate with employees so that they can terminate ahead of time or rotate positions to avoid the severance of employees when restructuring.

If the enterprise cannot negotiate with this group of employees to terminate a labor contract ahead of time, the enterprise must still comply with the development of the labor utilization plan, which includes the issue of severance of the employee and payment of redundancy allowance as prescribed.

2. The group of employees that an enterprise dismisses for disciplinary reasons

For this group of employees, enterprises should complete the labor disciplinary process before restructuring. This is to mitigate a case in which the enterprise dismisses the employee instead of allowing the proper completion of the process according to the Labor Code. This could lead to the employees complaining or bringing a lawsuit to the Court because the enterprise unilaterally terminated the labor contract illegally due to failure of dismissal procedures.

3. The group of employees who are nearing retirement or have reached retirement age

The group of employees who are nearing retirement or have reached retirement age as prescribed by the Labor Code is the group that enterprises need to pay attention to when developing a labor utilization plan. Accordingly, enterprises are responsible for coordinating with social insurance agencies to carry out retirement procedures for employees as prescribed.

4. The group of foreign employees who still have a working term in their labor contract

The special characteristic of this group of foreign employees is that their labor contracts are tied to their work permits and temporary residence cards in Vietnam. The enterprise also needs to pay attention to develop appropriate labor utilization plans.

In cases in which an enterprise cannot develop a labor utilization plan for foreign employees and resolve employment issues, leading to the labor contract being terminated prematurely and the work permit being invalidated, the enterprise has the following responsibilities:

  1. Payment of unemployment benefits to foreign employees according to the provisions of the Labor Code; and
  2. Notification to the immigration agencies in writing about the fact that foreigners have been issued valid documents for entry, exit, or residence that are still valid, but there is no longer need for sponsorship within the validity of temporary residence period in Vietnam according to the Law on Entry, exit, transit, and residence of foreigners in Vietnam.

The above is not official advice from BLawyers Vietnam. If you have any questions or suggestions about the above, please contact us at consult@blawyersvn.com. BLawyers Vietnam would love to hear from you.

Date: 09 September 2023

Writer: BLawyers Vietnam


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